ISSN 1105-9303
13 June 2014 Vol. 15 / No. 23
SWEEPING CABINET OVERHAUL, BUT VARVITSIOTIS CONTINUES IN PIRAEUS Prime minister Antonis Samaras, June 9, carried out a sweeping overhaul of his cabinet, replacing Finance minister Yannis Stournaras with economist and former prime-ministerial adviser Gikas Hardouvelis and introducing different faces from both coalition parties, though Miltiadis Varvitsiotis remains at the Piraeus headquartered Shipping and Aegean ministry. Though the changes were many, analysts note they were unlikely to lead to any change in the direction of the government 's austerity drive. Stournaras left the Finance ministry and has since been appointed to the top post at the Bank of Greece, replacing Giorgos Provopoulos, whose term expires later this month. Hardouvelis, a professor of finance and banking administration at the University of Piraeus, economic adviser to Eurobank and former adviser to ex-premiers Lucas Papademos and Costas Simitis, will be tasked with pushing reforms and leading debt relief talks in the fall. Other key changes in the cabinet included the appointment of New Democracy MP Argyris Dinopoulos as Interior minister, while new Education minister is former Pasok minister Andreas Loverdos. ND 's parliamentary spokesman Makis Voridis took over Health ministry, replacing Adonis Georgiadis, who prior to being Health minister was Shipping minister. The new Public Order minister is ND 's Vassilis Kikilias, with incumbent Nikos Dendias picking up the Development ministry portfolio, replacing Costis Hatzidakis, who has left the government, but is being tipped to turn-up in Brussels, later on. Those staying in their posts include Evangelos Venizelos, as deputy PM and Foreign minister, Defense minister Dimitris Avramopoulos, Environment minister Yiannis Maniatis, Transport minister Michalis Chrysochoidis, Tourism minister Olga Kefaloyianni and Labor minister Yiannis Vroutsis.
MISSING FAIRDEAL TANKER WAS LOOTED, BUT 24 CREW UNHARMED The Greek tanker Fair Artemis 'missing' for a week with 24 crew aboard was released from pirate control off West Africa, June 11. Piraeus-based owner Fairdeal Group Management said the gasoil cargo of the 12,800dwt Fair Artemis was stolen but all crew are safe. The 2009-built Liberian-flagged tanker had been hijacked in the Gulf of Guinea, off Ghana 's capital Accra. The master of the tanker is believed to have sent a distress call, June 4, to say the vessel was attacked by pirates. Fairdeal fleet director, John Gray, June 11, said: "We have spoken to the captain of the vessel and are delighted to say everyone on board is safe. The families and appropriate authorities have been contacted. More details of events will undoubtedly become clear. So far we can say the ship was boarded by a number of pirates, who have stolen the cargo and other items on the vessel." West African piracy has its roots in an uprising in Nigeria's oil-rich Niger Delta that has given rise to criminal networks. Gangs target cargo, which is often fuel, and rob or kidnap crew members. Fairdeal said the ship's crew hailing from the Philippines, Sri Lanka, Greece, Ghana, and Myanmar, had been operating under "enhanced security levels". Meanwhile, 11 crew members held hostage by Somali pirates for more than three years have been
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1 released, regional and UN officials said, June 7. The 11 men freed were crew on Malaysian-owned cargo vessel Albedo which was hijacked 900 miles (1,500kms) off Somalia in November 2010 while sailing from the UAE to Kenya. "They are all healthy," said Abdi Yusuf Hassan, the interior minister of Galmudug region. He said no ransom was paid. Seven of the ship's 23-man crew were released in 2012 while four others drowned when the ship sank last year.
POSIDONIA ALREADY LOOKING FORWARD TO 2016 Posidonia 2014 ended on a high note creating new event records in both the number of visitors and participating countries, cementing the event's appeal and growing popularity as the most diverse and prestigious gathering of shipping-related people and industries. Posidonia Exhibitions SA reports 19,421 shipping people – Posidonia is not open to the general public – walked the corridors of the four Athens Metropolitan Expo halls during the June 2 / 6 event, a 10% increase in visitor numbers compared to the previous event two years ago. They came to meet with members of the Greek shipowning community as well as representatives from 1,843 exhibitors from a total of 93 countries – another Posidonia record. And as proof of a successful event organisers report great interst in the next Posidonia, scheduled June 6 to 10, 2016 at the same venue. "Forward bookings look exceptionally encouraging and we are confident the success of this year's Posidonia will be emulated in two years' time," said Dimitra Michael, md, Posidonia Exhibitions. "Shipping is slowly rebounding because global trade conditions are improving and the busier our oceans become over the next 24 months, the more optimism we will witness on the Posidonia 2016 floor space", she anticipates. Major Posidonia exhibitors, including the organisers of the national pavilions of the Netherlands, Japan, Turkey and Denmark, as well as major exhibitors have already confirmed their participation for Posidonia 2016. "Posidonia's strong links with the Greek shipping community and its proven track record as the place where deals get done, are two of the most important assets to distinguish this event in the minds of the global maritime community. Our reputation for successfully blending business deals and networking with a compelling conferences and seminars agenda, enriched by the Posidonia Games, our sporting events, makes Posidonia's floor space a coveted real estate asset for every member of the international maritime industry", said Michael. Exhibitors agree: Nawfal Al Jourani, the communications manager of Dubai Maritime City Authority, said: "During Posidonia we have made tonnes of connections with potential business partners. We feel the Greek maritime environment is the ideal place for Dubai to promote its varied maritime sector services and product offerings." Antonio Tacquis from Panama Shipping Services said: "I have made so many deals through Posidonia that I think I have to double my staff in Panama to handle the new demand". Dwain E. Hutchinson, master mariner deputy director of the Bahamas Maritime Authority, a first-time visitor to Greece, said: "Through our Posidonia presence we promoted the holistic offering of the Bahamas, from our ship registry and ship yards to our financial sector and tourism product." On behalf of the Posidonia lanyards sponsor, John Smyrnaios, manager for Greece & Cyprus of ABB said: "Walking around Posidonia for five days almost 20,000 visitors were wearing black lanyards with ABB branding on them. We simply must be present and visible here at Posidonia. The market demands to see us here as the size of our company doesn't allow us to be anywhere else".
VENIAMIS URGES FOR NEW LAWS TO BOOST JOBS AT SEA FOR YOUNG PEOPLE Greek shipowners want to employ more young Greeks on their ships, while proposals to tax transit supplies for ships and tax foreign crew members were "a tragic mistake ", says Union of Greek Shipowners president, Theodore Veniamis. Addressing the world's shipping media hours before the curtain came down on Posidonia 2014, Veniamis said hopes of increasing employment were part of the industry 's overall effort to help the Greek government handle the nation 's deep economic crisis. Regarding suggestions new taxes be imposed on the industry, he said: "We do not enjoy more tax benefits than the rest of the globe. We
2 just want to remain competitive and ensure the state brings everything into line." Since austerity policies abolished annual collective agreements with labour organisations, the UGS has advocated new rules authorising individual contracts with seafarers. The UGS also wants more flexible rules for employing experienced Greeks and for boosting the quality and capacity of the national training system by allowing private academies. // continued page 4
INSURANCE PROJECT OFFERS 'SEASONED APPROACH FOR SEASONED VESSELS' With the aim of controlling claims before they happen, three established players in the insurance market have combined to meet the needs of a niche but significant sector of the shipping market, by offering a "seasoned approach for seasoned vessels". Over a year in the making, the product offers full insurance for vessels over 20 years, and is based on the proactive control of claims. Backing the project are Romania's leading insurance company Astra Insurance Co, which has a strong experienced marine department, Athens-based JLJ Maritime SA, a well recognised and respected name in the marine insurance world for over 40 years, and Qatar Re, Zurich, part of the Qatar Insurance Corp which gives further confidence to policyholders, their banks and brokers. With the world's fleet divided between vessels built prior to 1993 and subsequent, respectively some 38,000 (48%) and 41,000 (52%), and Asian-controlled tonnage representing some 40% of the world's fleet and Greek-controlled tonnage represents 40% of European tonnage, the project offers two regional All Risk H&M Insurance facilities: 'Zing' – for Asian tonnage and 'Nautilus' – for Greek and Mediterranean tonnage. The Jonathan Jones-led JLJ Maritime has a reputation for innovative and successful ideas and was the driving force behind the project. As Jones pointed out: "It is a truism older cars which are properly maintained, serviced and driven with care will produce fewer accidents than a brand new sports car driven by an uncaring, unthinking young driver. The same maybe said for ships. "Whilst it is true newer vessels generally experience a lower incidence of loss, than older vessels, at the same time, newer vessels have both substantially higher sums insured but with currently extreme- ly modest rates. Newer vessels when they experience casualties result in costly repairs or claims as witnessed by Costa Concordia . Therefore, we expect this sector will produce better risk / reward ratios due to the combination of underwriting factors coupled with pro-active claims management." The conditions are distinctively 'all risk' and based on the International Hull Clauses. Jones explains that a "unique questionnaire aimed at better understanding the ethos of the management has been drafted to help with a positive pro-active approach to claims which will strongly promote alternative dispute resolution". Significantly, the trio recognise the role brokers' play is extremely important and therefore brokers will be encouraged to show who can demonstrate a keen appreciation of the facilities and who have an experienced claims team. "The regional policy approach is geared to optimising regionally available knowledge, expertise, with regard to business production, surveying and claims handling," said Jones. "The regional facilities will develop strong relations with local surveyors, salvors, and ship repair yards - to source class approved reconditioned parts, if applicable, will further keep a control on the cost of repairs. This highly important area is a strong feature of the benefit of the variety of skills available to the venture," he said. A comprehensive and standard Survey Report has been developed. Uniquely if insurances are effected, then the cost of the survey will be paid for by the underwriters. Surveyors will be encouraged to use thermography as part of the risk management procedures to further eliminate any dispute regarding wear and tear. Discussions are set to take place regarding appointing a dedicated salvage facility which will be on LOF. "The outcome of the salvage will be agreed by salvors and underwriters to mutual satisfaction, aimed at both reducing costly arbitration and the time taken," said Jones, who concluded, "proactive control of claims is considered highly desirable to give an efficient service to not only the assureds but to ensure a positive outcome for the underwriters and their reinsurers".
3 continued from page 3 // New laws have been passed, but implementation has been delayed by the need for additional governmental decrees. "Issues still need to be solved but I foresee in the next few weeks this will be done," said Venia- mis, at the June 6 press briefing. He believes the final touches to be made by the government will enable "young Greeks to work on our ships and reap the benefits". Veniamis drew attention to a new study of the Foundation of Economic and Industrial Research (IOBE), referring to the boosting of employment of Greeks in oceangoing shipping. The as-yet- unreleased study projects shipping could be the driver for employing as many as 220,000 more Greeks with the correct business development, netting up to €5bn ($6.8bn) in added value for the country. Veniamis said results of the survey are feasible on condition economic terms prevail in the Greek labour market in accordance with the terms of the international maritime labour market and relevant international conventions. "It should be borne in mind the Greek-owned vessel has to be competitive in order to survive in the international shipping arena," he said. Pointing out Posidonia 2014 coincided with the Greek presidency of the Council of the EU, which "is at a crossroads with significant changes in the governance of its legislative institutions", Veniamis said: "European shipping should be placed at the centre of the vision of European policy. The maintenance of a competitive fleet controlled by the EU is of the utmost importance for servicing its economic, commercial, energy and strategic interests. "However, the continuation of the existing guidelines on state aids to maritime transport is a necessary prerequisite for the competitiveness of community shipping. These guidelines, for many years, provide the institutional framework for the operation of community shipping safeguarding a level playing field for it," said Veniamis.
PANAYOTIDES CUTS ALL TIES WITH EXCEL AFTER A DECADE Shipowner Gabriel 'Villy' Panayotides and his family have sold their remaining stake in Excel Maritime Carriers, the Greece-based bulker owner which emerged from a Chapter 11 procedure earlier this year under the control of US-based investment funds led by Oaktree Capital Management and Angelo Gordon. A joint announcement, June 10, issued by Excel Maritime Holding and the founder and former ceo, Panayotides, said they had "jointly decided to discontinue their various relationships". To this end, "the Panayotides family has sold its equity interest in Excel, and the company has accepted Mr Panayotides ' resignation from the company". The family 's remaining shareholding was believed to be 8.7%. Panayotides was removed as ceo after a board meeting at the end of May, and Excel 's operation was moved out of its previous headquarters, a northern Athens building owned by Panayotides. Excel controls one of the biggest US-listed bulk fleets and its day-to-day management is being undertaken by cfo Pavlos Kanellopoulos and coo Kostas Koutsoubelis, who have assumed "a dual leadership structure". Panayotides founded Excel as an investment vehicle and floated an IPO on the Amex just over a decade ago, before shifting the company to the NYSE late summer 2005 in search of liquidity. The fleet was managed by Panayotides' privately owned Maryville Maritime, which at the beginning of April, according to Newsfront , stood at 39 bulkers of 3.583m dwt, a fleet the company would not confirm.
GENCO'S CHAPTER 11 RESTRUCTURE FACES NEW CHALLENGE The restructuring plan backed by Genco Shipping & Trading's management and debt holders is facing two challenges after a US government watchdog joined a small group of shareholders opposing the pre-package plan. A confirmation hearing began in New York, June 12, to rule on the Chapter 11 restructuring plan. That scheme calls for most of the equity in the restructured Peter Georgopoulos-led Genco to be provided to holders of debt from the circa-2007 credit facility, with a smaller portion of the new ownership going to bondholders and management. Shareholders, June 6, registered opposition to the plan saying it manipulates analysis to ascribe too
4 little value to the New York bulker owner, among other complaints. US trustee William Harrington, a Justice Department official who oversees the administration of bankruptcies across much of the US northeast, joined in with a more limited challenge, arguing the bankruptcy judge should throw out two provisions of the plan. Management of the NYSE-listed Genco maintains the pre-package will transform the company into a healthy entity with a manageable balance sheet by wiping out $1.2bn in debt and injecting $100m in cash into the operation along with other benefits. The equity holders committee say the post-restructuring enterprise value of $1.48bn as estimated by Genco advisor Blackstone "falls just short of the value that would entitle equity holders to obtain a distribution". They also allege a low enterprise value estimate reduces "the likelihood holders of equity interests could participate in the substantial upside potential" of Genco after the reorganisation. Genco's legal team says Blackstone correctly determined that the appraisals of Genco 's 53 vessels put the company 's assets below the value of its debt and reject the shareholder group 's argument the organisation should have been valued based on a more optimistic view of future charter rates. Genco filed for Chapter 11 bankruptcy protection in April with a plan that gives current shareholders warrants for just 6% of the company, while paying lenders most of what they are owed as part of a deal that includes an 81% stake in the outfit, though the final percentages will vary depending on Genco 's valuation at a later time.
SALE OF PIRAEUS AND THESSALONIKI PORTS MOVES FORWARD Eight groups have stepped forward in response to the tender called by the Greek state's privatisation fund (TAIPED) for the 67% stake in the Thessaloniki Port Authority (OLTh), while five groups move forward in the bidding for the Piraeus Port Authority (PPA). The eight to have thrown their hats in the OLTh ring are: APM Terminals, hq in The Hague; Munich-based Deutsche Invest Equity Partners GmbH; Swiss company Duferco Participation Hold- ings; ICTS of the Philippines; Japan's Mitsui & Co; Dubai Port subsidiary P&O Steam Navigation; Russian Railways in association with local firm GEK Terna; and Turkey 's Yilport Holding. In an announcement, TAIPED said its privatisation advisors will evaluate all bids before submit- ting recommendations to the fund's for the candidates to be included in the next phase of the tender. TAIPED has approved the five groups to be included in the second phase of a tender to sell a 67% equity capital in the PPA. These five are: APM Terminals, Cosco (Hong Kong), ICTS, Ports America Group Holdings and Utilico Emerging Markets, with the Peter Yu-led Cartesian Capital Group, the only original bidder not to progress. The five will have access to detailed data over the assets of the port and the terms of the tender procedure. TAIPED also approved the final plan of a concession contract for the exploitation of the first group of tourism harbors – Alimos, Poros, Hydra, New Epidavros – with the submission of biding bids expected in July. Meanwhile, several major international firms have chosen Piraeus to be their products ' gateway to Europe and are creating assembly lines in Greece. At the same time, foreign groups with activities in the forwarding and logistics sectors are preparing to take their own positions, while exporters from third countries are mulling the option of bringing their distribution centers to Greece. A few days ago the government tabled a bill in parliament regulating supply chain issues, which clearly states this also concerns the assembly of products or small modifications. This move opens the way for a market that could contribute some €5.1bn to the GDP over a four-year period, according to the National Bank of Greece. A survey reveals foreign groups which have brought their distribution centres to Greece, including Chinese giants ZTE Corp and Huawei Technologies and US firm Hewlett-Packard, have already reached the end of the planning stage for the operation of product assemblage or modification in this country. Sony has also chosen Piraeus as an entry point from which to take their products to Europe, while California-based Cisco and South Korea 's Samsung are in talks to follow suit. Sony 's products are transported via a Trainose service from Piraeus to Slovakia, where the Japanese electronics company has installed an assembly and distribution centre. Logistics group Bergen Logistics of Belgium is reportedly about to open an Athens presence, while Switzerland 's Kuehne + Nagel is expanding.
5 SHIPMANAGEMENT IS ONLY CYPRIOT SECTOR TO SHOW STABILITY Cyprus Central Bank data reveals the island's shipmanagement community generated revenues of €819m ($1.114bn) in 2013. The results was boosted by €417m in the second half of the year, up 3.73% from the €402m in the first half, with the sector contributing 5.1% to the island's GDP. Though shipmanagement is the only sector which has shown stability during the past year for the island's economy, the revenue level was the lowest in four years, indicative of the impact from the island 's economic meltdown that affected all sectors. Some 85% of revenues from shipmanagement arose from services provided to foreign-flag ships, up from 82% in the first half of 2013. Germany remains the biggest partner of the Cyprus maritime sector accounting for 53% of the shipmanagement business, followed by Vietnam-flagged vessels (6%), Russia (5%), Singapore (4%) and 2% each from Greece, Liberia, the Netherlands and Italy. On a revenue basis, 48% from shipmanagement derives from Germany or about €200m, followed by Poland (8%), Curacao (6%), the Netherlands (5%), Singapore (4%) and 2% each from Russia, Marshall Islands and Norway. The preferred service provided to German shipowners is crew management (52%) which in turn accounts for 43% of all services in the sector. Full shipmanagement accounts for 46% of business, of which 22% is from Russian shipowners, 12% from Germany and 10% from Malta. Technical management accounts for 11% of shipmanage- ment business, while there were no cases of chartering recorded in the second half of 2013. In the case of expenses, the bulk of 55% of the €368m in costs accounted for crew wages, of which 40% was paid to non-EU nationals. A further 27% of costs went to management fees and 18% to shipmanagement rates. The costs were paid in the Philippines (22%), followed by Cyprus (20%), Poland (10%) and Ukraine (10%). The costs paid to the Philippines, Poland and Ukraine were mainly crew wages.
I C S DEFENDS I M O WHEN CALLING ON STATES TO IMPLEMENT NEW REGIMES The International Chamber of Shipping (ICS) has defended the speed of action at Imo and voiced its backing for the Imo 2014 theme "Imo conventions: Effective Implementation". ICS branded allegations the Imo is too slow as "unfounded and rather unfair" in its annual review published just prior to its agm hosted by the Cyprus Shipping Chamber in Limassol, June 11-12, during its 25th anniversary year. ICS said pace of changes brought about by the Imo are due to the technical complexity of the work it does, the political nature of many of the issues it addresses and the scale of negotiation involved in drawing consensus from over 150 member states. ICS comprises 34 member national shipowners ' associations, which collectively represent all sectors and trades and over 80% of the world merchant fleet at international regulatory bodies that impact on shipping, including the Imo. In his introduction, ICS chairman, Masamichi Morooka focused in particular on the need for governments to address questions regarding the implementation of impending environmental regulations: "The shipping industry is about to invest billions of dollars in order to further improve its already impressive environmental performance. In parallel therefore it is reasonable for shipowners to expect that governments will properly implement and enforce these new regimes". The 2014 review restated the position of ICS on a number of headline regulatory matters in shipping, including that an Imo study into the availability of distillate fuels should be brought forward, member states should withhold from ratifying the ballast water management convention until numerous concerns are addressed and the current rules on places of refuge should be more rigorously enforced.
GOVERNMENT AND COSCO KEEN TO FINALISE INVESTMENT AGREEMENT The forthcoming visit to Greece of Chinese Prime minister Li Keqiang, the strategic bilateral cooperation confirmed by Cosco's presence and investments in the port of Piraeus plus the Chinese company's interest in becoming the Piraeus Port Authority (PPA) majority shareholder, were topics
6 discussed at a meeting, June 10, between Shipping and Aegean minister Mitiadis Varvitsiotis, Cosco senior executives and Chinese Ambassador to Athens, Xiaoli Zou. Varvitsiotis underlined the presence of Cosco in the port of Piraeus has brought major gains to the Greek state and has proven to be among the most important and profitable investments made globally in recent years. He also said efforts are being made to reinforce this relationship, noting relations with China are of strategic importance for the Greek government. The minister also referred to the issue of reaching an agreement regarding further investment in the port. He said the agreement was initialed in the record time of five months and since then consul- tations and cooperation were under way with the European Union for its final approval. He said: "Our priority is to ensure the port of Piraeus' investment will be sustainable and functional in the future". On the privatisation of Piraeus port, Varvitsiotis said "it is a port of multiple uses," adding, "we have decided to take advantage of our country's geostrategic position and that is why we are proceeding with the port's privatisation". Head of the Cosco delegation, cfo Sun Yueying, underlined the expansion of the investment is also an opportunity for the port's further development. Referring to the outcome of the amicable settle- ment between Piraeus Port Authority and Cosco, she also stressed the importance of the conclusion of the agreement.
COURT BATTLE BETWEEN NEWLEAD AND IRONBRIDGE HEATS UP Nasdaq-listed bulker owner NewLead Holdings said it has received a temporary restraining order against Ironridge Global IV from enjoining the issuance of further common shares of NewLead pursuant to its Series A Preference Shares. NewLead said June 11, the United States District Court, Southern District of New York determined a preliminary injunction against further issuance was unavailable because, as a threshold matter, the court lacked jurisdiction over Ironridge. Richard Kreger of Ironridge has advised NewLead that Ironridge would like to reinstitute funding. But a statement issued by the Piraeus-based NewLead, said: "We advised Ironridge NewLead will not accept any further funding, as NewLead previously provided a default notice and terminated the relationship because of Ironridge's numerous breaches, including failure to provide necessary collateral. Any funds received from Ironridge will either be held as security for NewLead's damage claims in arbitration, or returned." Michael Zolotas, chairman and ceo of NewLead, said "We believe the Court should have accepted jurisdiction to prevent Ironridge from continuing to inflict harm on NewLead through its exercise of 'self-help', pending the outcome of the arbitration. However, we intend to vigorously defend our interests and pursue our claims for significant damages caused by Ironridge's many bad acts, breaches and misrepresentations. "We remain concerned Ironridge has been and will continue manui- plating the stock of NewLead based on irregularities in Ironridge's disclosed and undisclosed brokerage relationships and have informed the relevant authorities of these concerns." Zolotas continued: "We urge other people who are considering whether to do business with Ironridge, and their affiliated principals, John Kirkland, Brendan O'Neil, Richard Kreger, and Keith Coulston, to carefully consider Ironridge's course of conduct with NewLead, as well as other com- panies who have instituted suits against Ironridge. "While Ironridge presents itself as a long-term institutional investor on its website and in conversations with companies, its conduct has proven it is unconcerned about the impact of its actions on the health of the company and solely concerned with its profit."
THE GREEK SHIPPING REVIEW
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